Here's some advice from some real estate investing pros who take the factors below to the bank - literally, earning more money on their real estate investments by following the advice listed below. These are real estate investing tips the pros follow:
It's not easy to earn money via an investment property, but it can be easier if you follow some of these investing tips before you buy a rental property.
There are no short cuts. It takes hard work to make money investing in real estate. It takes expertiese or the knowledge that you need to hire some to fix or solve a problem. The hard work comes at the beginning. It then gets easier if you pick the right properties. Yes, you can make money while you're sleeping but you've got to do the research before you buy an investment property.
- How many requests are being made for mortgage loans for properties in the area?
- What are the average rental rates in the area?
- Have patience and wait for the right price
- Pay attention to construction costs
- Real estate agents should know exactly what you want - so they can work for you by sending you properties with your specifications
- Negotiate at all levels
- Do your own research and don’t just accept information from a seller or agents
- Work available opportunities and don’t narrow ones views based on what the media is saying at the time
- Ask a lot of questions
- Don't get emotional attached to a property - focus on the numbers
- Be likeable (friendly)
- Have a plan and stick to it
- Know what qualities make you a good real estate investor and focus on those - whether that's networking or remodeling and upgrading properties
- What makes this property unique or standout? Is it close to a good school, has a nice backyard, or is it away from the highway and quiet...
- What makes your property unique and why would a tenant to live there?
- Don't count on property appreciation, bank on how much rent you can earn
- Is there enough parking space for the property? Is there a one or two car garage? If you're in a bigger city, most likely you'll need good parking near the property. If you're in a smaller town, outside the city, then you'll need a two car garage. Weather is also a factor, you can't leave a car out on the street in a city where it's very cold and snowy in the winter months.
Keys to Think About in the Real Estate Market
- Property prices need to come down after a bubble or incomes must grow to offset above market rates, have patience and wait for the property that matches your needs
- Myth – or false concept, scarcity on the coasts of the United States reduces supply and prevents big drops in price (not always true)
- Myth – values don’t drop in areas where employment is growing; other factors come into play like competion from other buildings for tenants and prices can go down
- What is your time frame for owning the property? Do you plan on keeping the property for ten or twenty years or do you plan on selling it sooner than that? Time is a crucial factor, since once you pay off your loan, or say re-finance the loan at a lower rate, your cash flow or earnings from the rent will increase as you have less to pay off on your loan.
Investors Keys and Tips
1) Get the sales cap rates of a building (what the property sold for not before sale)—usually public data. Look for sales comparables.
2) Get a real estate agent to find or help with the property management search. Agents have a vested interest in the future sale of the building and have a number of contacts.
3) Buying condemned houses can work if all the permits are in place—electricity, plumbing, if it’s all there and in good shape you will save time and money. No need to get permits and set this infrastructure up. Learn more at locating foreclosures.
4) As a new investor, buy properties in areas close to where you live so you can monitor them, unless you are hiring an experienced property management team.
Even still, it’s good to know what’s going on and not be in the dark. You can discover ways to save money, way’s you’re losing money, way’s people are taking money, and so on, if you keep a close eye on your property. Essentially, early on, when you’re just getting started, there’s more risk involved in owning property in another state or a great distance away from where you live.
What else should you be aware before buying your property?
Buy property in areas where people want to live. Seems simple enough, close to good schools, parks, stores, public tranportation, and in upcoming and well cared for neighborhoods.
Do you want to buy a property to fix up or a rental that is in perfect condition? Is being a residential landlord an option or do you want to higher an on site manager or tenant to take on those duties? What kind of property, house, apartment, duplex? What type of loan do you want? How much do you want to put down?
Check our site regularly for hot properties. Also check your local paper and contact a real estate agent to let them know what you have in mind.
What makes your place standout?
Want to buy a fixer upper or a new property? Is there somehting you can do to set your property apart - new carpet for a interested tenant? Or maybe it's free Internet access?
Take a look at past vacancy rates for the area in which your buying. Long term tenants are steady rent although often locked in at a lower rate.
Explore potential advertising options for your property--online, friends, church, colleges, newspapers, and so on.
Analysis rental rates for the area you're buying. Negotiate and calculate the totals costs and make sure you will make money.
Go through the whole process and get help if you have questions - learn more at our investing property guide.